OSI Group Pulls Shanghai Husi-made Food Products from Chinese Outlets

U.S. meat supplier OSI Group LLC is withdrawing products made in a Shanghai factory from undisclosed outlets in the wake of a food safety scare last month that hit fast food chains McDonald's and Yum Brands Inc.'s KFC.

"While there have been no reported illnesses linked to any Shanghai Husi products, recovering this production is an important step in facilitating the investigations and rebuilding the respect and trust of our customers, the government and the people of China," OSI said in a statement late on Thursday.

OSI didn't say how much of Shanghai Husi Food Co.'s production would be withdrawn, nor from which outlets. OSI was not immediately available for comment beyond its published statement, and the Shanghai Food and Drug Administration regulator did not respond to requests for comment.

The scare was triggered by an undercover Chinese television report that showed workers at OSI's Shanghai Husi factory using expired meat and doctored food production dates. The factory was a supplier to McDonald's and Yum Brands, which have since said that the Husi scandal will have a material impact on earnings.

Yum has cut ties with OSI globally. McDonald's China and Hong Kong are no longer sourcing any products from OSI companies in China, and McDonald's in Japan has moved its sourcing to Thailand.

The scare, which has also involved restaurants in Hong Kong, Macau and Japan, is a sensitive issue for China, which has struggled to restore confidence in its $1 trillion food processing industry since six infants died in 2008 after drinking adulterated milk.

The withdrawal is a precautionary measure and is different from a recall which indicates a safety concern, said a person with direct knowledge of the situation. The person did not have permission to speak and did so on condition of anonymity.

Last month, OSI said an internal investigation had found practices at Shanghai Husi that were "absolutely inconsistent with our internal requirements." Workers at the plant also told Reuters hygiene standards at the factory were lacking, but production lines were temporarily cleaned up before inspectors arrived for pre-scheduled audits.

OSI confirmed earlier this week that the Shanghai branch of China's Public Security Bureau has detained six Shanghai Husi employees. It said the Shanghai Food and Drug Administration and Shanghai Administration for Industry and Commerce had launched a joint investigation.